icc-imf market snapshot january2012 - uscib · icc-imf market snapshot january2012 ... join forces...

A snapshot of market conditions in trade finance

Prospects in most regions, except in emerging Asia, are grim

Financial constraints impacting on the recovery of markets

A total of 337 completed responses from financial institutions

ICC-IMFMarket

SnapshotJanuary2012

A Market Intelligence Report of the ICC Banking Commission

ICC-IMF Market Snapshot, January 2012

Editor

Thierry Senechal

Senior Policy Manager, International Chamber of Commerce

Steering Committee

Vincent O’Brien

Chair, ICC Banking Commission Market Intelligence Group

Gary Collyer

Senior Technical Advisor, ICC Banking Commission

Leo Cullen

Partner, Coastline Solutions

Ranil Salgado

Division Chief, Trade, Institutions, and Policy Review, International Monetary Fund

Copy Editor and Proofreader

Ron Katz

Graphics

Rebus

Printed in January 2012

Copyright © 2012

International Chamber of Commerce

All rights reserved. ICC holds all copyright and other intellectual property rights

in this collective work. No part of this work may be reproduced, copied, distributed,

transmitted, translated or adapted in any form or by any means – graphic, electronic

or mechanical, and including without limitation, photocopying, scanning, recording,

taping, or by use of computer, the internet or information retrieval systems – without

written permission of ICC through ICC Services, Publications Department,

38 Cours Albert 1er, 75008 Paris, France

ICC Publication No. 858E

ISBN: 978-92-842-0151-8

www.iccbooks.com

ICC-IMF Market SnapShot • January 20123

Contents

Acknowledgements 4

Foreword 5

SECTION 1 • Background and Methodology 6

Purpose and scope of the Market Snapshot 6

Participation in the 2012 ICC-IMF Market Snapshot 7

SECTION 2 • Key Findings 10

The outlook for demand in Asia is still strong 10

Financial constraints impact negatively on global markets 10

SECTION 3 • The Way Forward and Conclusion 13

SECTION 4 • Annexes 14

Annex I: Regional and Bank-Size Analysis 14

Advanced Markets: Europe Advanced Markets: Euro Area 15

Advanced Markets: Other 16

Sub-Saharan Africa 17

Central and Eastern Europe 18

Commonwealth of Independent States 19

ASEAN-5, China and India 20

Emerging Asia 21

Middle East and North Africa 22

Latin America and Caribbean 23

Large-Sized Banks 24

Medium-Sized Banks 26

Small-Sized Banks 28

Annex II: Note on the Statistical Analysis 30

Annex III: Questionnaire 31

ICC-IMF Market SnapShot • January 20124 ICC-IMF Market SnapShot • January 2012

Acknowledgements

The International Chamber of Commerce (ICC) would like to express its gratitude to the International Monetary Fund (IMF) for making it possible to conduct this Market Snapshot, January 2012. In particular, we would like to thank Ranil Salgado and Mika Saito for the guidance and valuable analysis provided to us.

The ICC-IMF Market Snapshot would not have been possible without the support of the ICC Banking Commission experts and members. We would like to thank Gary Collyer, Senior Technical Adviser of the Banking Commission; Vincent O’Brien, Chair of the ICC Market Intelligence Group; and Leo Cullen of Coastline Solutions for their inputs to this report. Ron Katz has reviewed the document with great care and made numerous valuable suggestions. More importantly, we would like to thank members of the ICC Banking Commission who responded to this Market Snapshot survey at short notice.

More than ever, we renew our thanks to ICC’s technology partner, Coastline Solutions, for compiling the online Market Snapshot.

ICC-IMF Market SnapShot • January 2012ICC-IMF Market SnapShot • January 2012 ICC-IMF Market SnapShot • January 20125

Foreword

Recent developments in European financial markets and their impact on global trade finance called for a Market Snapshot that would help the industry and policymaking communities to monitor emanating risks and provide timely input into on-going regulatory and G-20 discussions. The International Chamber of Commerce (ICC) and the International Monetary Fund (IMF) decided to join forces to conduct this snapshot survey of trade finance conditions worldwide, with the objective to determine the market outlook for the year 2012.

A few findings were striking. This new research based upon inputs received from 337 financial institutions revealed that the outlook for the demand for trade finance products in 2012 for emerging Asia was the strongest and the Euro area the weakest.

Factors contributing to the negative outlook for 2012 were primarily financial constraints which were reducing the availability of trade finance. This was particularly being felt by large banks and those with business in developing countries. The financial constraints appeared to reflect the large share of trade finance coming from Euro area banks. The Market Snapshot showed that recent European bank deleveraging has led to tighter lending guidelines and reduced availability of credit/liquidity. In addition, US dollar funding for non-US financial institutions may exacerbate the situation, since trade remains largely denominated in US dollars.

Many respondents noted that one of the challenges facing the global economy was a more stringent regulatory environment – as represented by the new Basel capital framework – which may impede a trade-led recovery. This was of particular concern, as many countries were attempting to export their way out of their currently dire economic conditions.

Recent measures taken by multilateral development banks (MDBs) and central banks to facilitate trade were perceived to be of some help. In light of the unprecedented pace of economic uncertainties and the turbulence in financial markets, stakeholders from business, government and international organizations are now facing new imperatives to remove impediments hindering trade flows, job creation and economic growth.

We believe that this ICC-IMF research will provide an important information source, enabling bankers, traders and government officials to gain an accurate snapshot of the trends prevailing in markets today and to gauge future expectations for global trade.

Thierry SenechalICC Senior Policy ManagerICC Banking Commission

Ranil SalgadoDivision Chief, Trade, Institutions, and Policy ReviewInternational Monetary Fund (IMF)


Section 1 Background and Methodology

Purpose and scope of the Market Snapshot

The Banking Commission of the International Chamber of Commerce (ICC) and the International Monetary Fund (IMF) have jointly conducted a short survey to assess the most recent developments in European markets and their impact on global trade finance. The Market Snapshot survey was in the field from 13-21 December 2011.

The Market Snapshot questions focused on the impact of recent developments in Europe on trade finance, and the role of public sector measures. There were eight questions in the Market Snapshot:

n How do you see the demand for trade finance evolving during 2012 by region?

n What are the reasons for the deterioration in trade finance activities?

n What was the impact of the recent European bank deleveraging on the trade finance industry?

n To what extent have the measures taken by MDBs helped in mitigating risks and easing funding pressures with respect to trade credit financing?

n To what extent have the central bank swap lines helped to lower the cost of borrowing and eased liquidity strains in financial markets?

n To what extent is the preparation for the implementation of Basel III affecting costs of funds and liquidity for trade finance right now?

n What else should the official sector (governments and international financial institutions) do with respect to trade credit financing?

n Finally, please tell us a little about your company’s location, activity and assets.

All the questions were multiple-choice questions (except for Q7), and responses were collected entirely online.1 For all the questions, respondents had an option to choose “not applicable” or “not sure” to distinguish their reasons for not responding. There were some options and questions left blank. These were treated as being “not applicable,” though strictly speaking, they might have been chosen because a respondent was “not sure”. “Not applicable” responses were not included in the response count (nor was the number of respondents answering in this way).

1 Coastline Solutions, ICC’s information technology partner, was responsible for the collection of the data.


Participation in the 2012 ICC-IMF Market Snapshot

The Market Snapshot survey received an exceptionally large number of responses: 498 were received in a week, of which there were 337 fully completed (the survey was considered “complete” if all seven multiple-choice “required” questions were answered). In total, the 498 respondents represented 91 countries and jurisdictions. Between 80% and 90% of the respondents were from banks or from respondents with bank characteristics.

Respondents by Question

(number of respondents)

(share of respondents with bank characteristics)

Q1: Outlook 413 0.82Q2: Factors affecting outlook 389 0.87Q3: Impact of deleveraging 380 0.89Q4: MDB facilities 379 0.89Q5: Central bank swap lines 378 0.89Q6: Basel III 377 0.89Q7: Official sector 227 0.81Q8: Bank characteristics 337 1.00Total 498 0.68

Source: ICC-IMF Market Snapshot (January, 2012).

Respondents by Country

The breakdown of responding banks by region and by global asset size shows that around one-third were large banks and around two-thirds were headquartered in advanced markets. The regional and asset distribution described below are based on the 337 responding banks that exhibited complete bank characteristics (Question 8). Given the size of the sample, these shares are assumed to be representative of the industry as a whole.

AfghanistanAlbaniaAlgeriaAngolaArmeniaAustraliaAustriaAzerbaijanBahrainBangladesh BelarusBelgiumBermudaBrazilBulgariaCambodiaCameroonCanadaChina

Cote d’IvoireCroatiaCubaCyprusCzech RepublicDenmarkEcuadorEgyptEstoniaFinlandFranceGeorgiaGermanyGhanaGreeceGuatemalaHondurasHong KongHungary

IndiaIndonesiaIraqIrelandIsraelItalyJapanJordanKenyaKoreaLebanonLuxembourgMacedoniaMalaysiaMaltaMexicoMongoliaMoroccoNepal

NetherlandsNigeriaNorwayPakistanPalestineParaguayPeruPhilippinesPolandPortugalRomaniaRussian FederationSaudi ArabiaSerbiaSingaporeSlovakiaSouth AfricaSpainSri Lanka

SwedenSwitzerlandSyriaTaiwanTanzaniaThailandTurkeyUAEUgandaUkraineUnited KingdomUnited StatesUruguayVietnamYemen

Source: ICC-IMF Market Snapshot (January, 2012).


The distribution of responding banks by global asset size and by primary business locations shows that Euro-area banks offered over half of the trade finance products worldwide.2 The share of these products offered was especially high in Central and Eastern Europe (71%), as well as the Commonwealth of Independent States (CIS), Latin America and the Caribbean, the Middle East and North Africa, and the Euro area itself.

2 Respondents indicated the size of assets only by ranges (e.g., US$100 million – US$499 million), and therefore, for each bank, a mid-range value (e.g., US$200 million) was assigned to estimate the total size of assets by region. For banks in the highest range, US$100 billion or more, US$100 billion was assigned.

Advanced Markets: Euro Area

Advanced Markets:Others

Sub-Saharan Africa

Central & Eastern Europe

CIS ASEAN5, China and

India

Developing Asia

Middle East and

North Africa

Latin America and

Caribbean

Regional Distribution of Respondents

HQ Location Primary Business Locations Branch or Susidiary Locations

Asset Size Distribution of Respondents

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

0.3

9

0.2

3

0.0

5

0.0

4

0.0

3 0.1

4

0.0

3

0.0

5

0.0

4

0.4

7

0.3

9

0.2

4 0.3

3

0.2

5

0.5

9

0.3

8

0.4

1

0.2

8

0.4

7

0.3

9

0.1

2

0.2

5

0.1

3

0.3

7

0.1

9

0.2

1

0.1

8Big Players by Asset Size of Banks

HQ in Advanced Markets: Euro Area HQ in Advanced Markets: Euro Area HQ in Others

Advanced Markets: Euro Area (157)0.60 0.21 0.19

Advanced Markets: Others (132)0.53 0.28 0.19

Sub-Saharan Africa (80)0.53 0.30 0.17

Central & Eastern Europe (112)0.71 0.18 0.11

CIS (83)0.62 0.21 0.17

ASEAN5, China and India (200)0.53 0.28 0.19

Developing Asia (128)0.52 0.32 0.16

Middle East and North Africa (139)0.60 0.30 0.10

Latin America and Caribbean (96)0.62 0.20 0.18

Share of banks with business in each region

US$100 billion or more

US$50 billion – US$99.9 billion





US$500 million – US$999 million

US$100 million – US$499 million

Under US$100 million

Source: ICC-IMF Market Snapshot (January 2012).

Note: Numbers in ( ) are the number of respondents answered each question (N/A not included).


References to specific regions or sizes of banks in the main text are based on statistical analysis described in Annex II. As a graphic presentation of these sub-sample results, four charts in the main text, which are based on the full sample, are replicated for each sub-sample (Annex I). Any notable differences between the results based on full- and sub-samples are discussed in the main text.

Sub-samples were created based on responses to Question 8 (bank characteristics). There were 337 responding banks. Respondents that did not exhibit bank characteristics were excluded from the sub-samples. Regional sub-samples were created based on “location of primary business.”

Responding banks were able to choose multiple locations, and therefore the sum of response counts of nine sub-samples by regions does not add up to 337; but to 1127. Sub-samples by size were based on global asset size. Responding banks were considered to be a large-sized bank if their global assets were greater than US$100 billion; a small-sized bank if assets were less than US$500 million; and a medium-sized bank otherwise. The sum of responses of three sub-samples adds up to 337.

Subsample Size

Primary Business Location Advanced Markets: Euro Area 157 Advanced Markets: Others 132 Sub-Saharan Africa 80 Central & Eastern Europe 112 CIS 83 ASEAN5, China and India 200 Developing Asia 128 Middle East and N. Africa 139 Latin America & Caribbean 96

Global Asset Size: Small Banks 70 Medium Banks 163 Large Banks 104 Source: ICC-IMF Market Snapshot (January, 2012)

US$ everywhere!!!


Section 2 Key Findings

The outlook for demand in Asia is still strong

The 2012 outlook demand for trade finance products showed that demand in emerging Asia was the strongest and the Euro area the weakest. Around 60% of the respondents indicated that the demand for trade finance in emerging Asia will show improvement in 2012, while close to 50% of respondents projected a further deterioration for the Euro area. The overall outlook for trade finance demand deteriorated from that for second half of 2011.3 Regional differentiations, however, were mostly unchanged; the outlook for emerging Asia remained strongest and the Euro area weakest.

The outlook is more positive if only the sub-sample of banks with primary business in each region is considered. In the analysis of the sub-sample of banks with primary business in each region, the share of banks responding “not sure” falls. Moreover, a larger share of banks expect improvements in trade finance in 2012, while a lower share anticipate further deterioration. These findings hold for all regions (see relevant charts in the Annex I).

Financial constraints will impact negatively on global markets

Financial constraints are the principal factors contributing to the negative outlook for 2012. These are particularly felt by large banks and those with primary business in developing countries. 90% of respondents indicated that “less credit or liquidity available at counterparty banks” would affect their trade finance activities either to a “large extent” or to “some extent”.

3 Data for the latter is found in the IMF-BAFT/IFSA trade finance survey conducted summer/fall 2011. This survey had a different regional breakdown in that it did not include the Euro area versus non-Euro area breakdown for advanced market (AM) countries. This survey also had a smaller sample size and covered the outlook only for the second half of 2011.

Trade Finance Outlook for 2012 (Full sample)

Improvement Stabilisation Deterioration Not sure

Advanced Markets: Euro Area (375)0.16 0.31 0.48

Advanced Markets: Others (368)0.19 0.53 0.22 0.06

Sub-Saharan Africa (345)0.28 0.30 0.21 0.21

Central & Eastern Europe (369)0.18 0.43 0.28 0.11

CIS (352)0.19 0.47 0.17 0.17

ASEAN5, China and India (374)0.59 0.30 0.06

Developing Asia (362)0.46 0.36 0.10 0.08

Middle East and North Africa (365)0.32 0.37 0.21 0.10

Latin America and Caribbean (344)0.32 0.38 0.08 0.22

Share of respondents answering each question

0.05

0.05




Similarly, 80% of respondents were concerned about a decline in credit from international financial institutions. To a lesser extent, a fall in the demand for trade finance and less credit and liquidity available at their own banks were also factors. As noted above, financial constraints seem to be more of a problem for large banks and those conducting business in developing countries, particularly in Sub-Saharan Africa (see relevant charts in Annex I).

Financial constraints appear to reflect the large share of trade finance coming from Euro area banks. The Market Snapshot indicates that Euro area banks represent over half of trade finance products offered by banks worldwide. In addition, the figures were high for Central and Eastern Europe (more than 70%), as well as the CIS, Latin America and the Caribbean, the Middle East and North Africa, and the Euro area itself.

The Market Snapshot confirmed that recent European bank deleveraging has led to tighter lending guidelines and less credit/liquidity availability. More than three-quarters of respondents indicated that the lending guidelines have become tighter, targeting specific countries and/or clients; this was the case for all regions. They also responded that less credit was available for trade finance. This was particularly the case for Sub-Saharan Africa, Central and Eastern Europe, Latin America and the Caribbean, where an increase in demand for risk-mitigating products or other trade finance products more generally was also reported. An increase in the cost of funds was also noted, particularly in Central and Eastern Europe, the CIS, developing Asia, the Middle East and North Africa (see relevant charts in Annex I).

0.42

0.47

0.11

0.31

0.49

0.20

0.28

0.50

0.22

0.31

0.42

0.27

0.18

0.55

0.27

0.09

0.59

0.32

0.15

0.44

0.41

Factors Affecting the Negative Outlook

To a large extent To some extent To no extent

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0 Less credit available at

counterparty banks (369)

A decline in credit from

int’l financial institutions

(377)

A fall in the demand for

trade activities (367)

Less credit available at own bank

(366)

A shift toward cash-in-advance

transactions (367)

A fall in the price of transactions

(363)

A decline in support from Export Credit

Agencies (365)

The Impact of the European Bank Deleveraging on Trade Finance Industry

Became more cautious with certain countries0.79

Decrease in available credit/liquidity0.76

Became more selective with customers0.75

Increase in the cost of funds0.69

Increase in concerns about counterparties0.63

Became more cautious with certain sectors0.55

Increase in demand for risk-mitigating products 0.52

Increase in demand for TF instruments0.28




Measures taken by multilateral development banks (MDBs) and central banks were perceived to be of some help. While more than 60% of respondents indicated that measures taken by MDBs, such as the International Finance Corporation (IFC)’s Global Trade Finance Program (GTFP) Insurance Facility (signed in June 2011) and its Global Trade Liquidity Program (GTLP) (launched in July 2009) have helped in mitigating risks and easing funding pressures, the support for such programmes does not appear to have been decisive. About a quarter of respondents indicated “not sure” when asked whether these programmes had been helpful. Similar results were observed for the reactivation of central bank swap lines, with close to 60% of respondents indicating that the swap lines have helped, but about one fifth not sure.

One of the challenges facing the global economy today is how a more stringent regulatory environment – as represented by the new Basel capital framework – may impede a trade-led recovery as countries strive to export their way out of the current dire economic conditions. Preparation for the implementation of Basel III seems to be already adding pressure on the cost of funds and the availability of liquidity. Close to three-quarters of respondents said they felt impacted either to some or to a large extent. This was particularly true for large banks (see relevant charts in Annex I). Specifically, by not fully accounting for the low-risk and short-term nature of trade finance from a regulatory perspective, the new Basel capital framework could make trade finance less accessible and less affordable to exporters and importers, especially small- and medium-sized enterprises.

0.13 0.09

0.30

0.500.48

0.44

0.23

0.14

0.18

0.25

0.12

0.14

Have the measures taken by MDBs helped?

(357)

Have the Central Bank Swap Lines helped?

(352)

Has the preparation for the implementation of Basel III

affected?(359°

The Impact of MDBs, Central Banks, and Basel III on Costs of Funds and Availability of Credit/Liquidity

To a large extent To some extent To no extent Not sure

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion



Section 3 The Way Forward and Conclusion

Market conditions are grim, with traders’ confidence eroding again in the grip of volatile markets, with supply and demand of trade finance being in jeopardy and regulatory constraints causing concerns. All of this is occurring against a backdrop of a global recovery, already feeble and rapidly decelerating.

More importantly, a two-speed financial system seems to be crystallizing. The ICC-IMF market snapshot survey found sentiment for 2012 strongest for emerging Asia and weakest for the Euro area. What was striking is the degree of dependence on Euro area banks (over half for all regions), nontrivial effects of deleveraging by these banks, and the limited perceived support from MDBs and swap lines versus the constraints coming from Basel III capital and liquidity charges. Indeed, as the world goes through a deleveraging process, particularly in Europe, and most governments no longer have the flexibility to implement fiscal stimulus, economic growth is expected to be lower in 2012 and probably negative in some regions.

In these circumstances, there is an urgent need for concrete and durable solutions to be forged at an international level. Although the pursuit of essential public finance and regulatory reforms is crucial in 2012 and beyond, we caution on the use of uncoordinated national initiatives and the layering of regulatory requirements which may pressure trade flows and eventually negatively impact on growth worldwide.

More than ever, our increasingly interconnected and interdependent financial markets are fraught with far-reaching uncertainties. The financial crisis of 2008-09 and the recent downturn have shown us that events that used to be localized or isolated now have systemic global, often unintended, consequences for all of us. Without doubt, the global economic scene is forcing us to reconsider how the business and policymaker communities interact. We need to work together to address the challenges so that we can emerge even stronger in the years to come.


Section 4 Annexes

Annex I Regional and bank-size analysis

For each region and each size group, four charts in the main text are replicated.

For the first chart on the trade finance outlook for 2012, for each region group, the outlook for corresponding region is used in comparing full- and sub-samples. As noted in the main text, these comparisons show that sentiment seems to be more positive if only the sub-sample of banks with primary business in corresponding region is considered. For each bank size group, the chart in the main text is replicated.

For the second chart on factors affecting the negative outlook, only the first three factors are used in comparing full- and sub-samples. Limited regional differentiations can be observed in these comparisons.

For the third chart on the effect of the European bank deleveraging, regional differentiations are more distinct and are discussed in the main text.

For the final chart, differentiations across regions are shown to be somewhat limited, but those across different sized banks are more pronounced, especially concerning the impact of the preparation for Basel III on credit/liquidity availability.


0.18

0.43 0.420.35 0.31

0.24 0.28

0.34

0.50 0.47

0.44 0.490.52 0.50

0.45

0.07 0.110.21 0.20 0.24 0.22

0.03

Sub sample(146)

Sub sample (152)

Less credit available at counterparty banks

A decline in credit from international financial instututions

A fall in the demand for trade activities

Full sample (369) Sub sample (154) Full sample (377) Sub sample (149) Full sample (367)

Improvement

Stabilization

Deterioration

Not sure

Trade Finance Outlook for 2012



The Impact of the European Bank Deleveraging

Full sample (380) Sub sample (157)

Full sample(375)

0.05

0.16

0.31

0.48

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

Became more cautious with certain countries0.79 0.01

Decrease in available credit/liquidity0.76 0.04

Became more selective with customers0.75 0.03

Increase in the cost of funds0.69 0.03

Increase in concerns about counterparties0.63 0.03

Became more cautious with certain sectors0.55 0.06

Increase in demand for risk-mitigating products 0.52 0.03

Increase in demand for TF instruments0.28 0.04

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

0.15 0.13 0.10 0.09

0.35 0.30

0.48 0.500.47 0.48

0.440.44

0.20

0.17

0.23

0.14

0.18

0.25 0.25

0.180.10

0.11

0.12

0.14

Sub sample (149)



Has the preparation for the implementation of Basel III affected?


The Impacts of MDBs, CB, and Basel III


1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion



Advanced Markets: Euro Area


0.23

0.46 0.42 0.36 0.310.24 0.28

0.56

0.520.47

0.44 0.490.55 0.50

0.21

0.02

0.110.20 0.20 0.21 0.22

0.00

Sub sample(126)

Sub sample (128)





Improvement

Stabilization

Deterioration

Not sure






Full sample(368)

0.06

0.19

0.53

0.22

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0









Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

0.14 0.13 0.11 0.09

0.35 0.30

0.50 0.500.45 0.48

0.430.44

0.18

0.18

0.23

0.14

0.18

0.26 0.25

0.180.07

0.15

0.12

0.14

Sub sample (129)







1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion



Advanced Markets: Other


0.50 0.530.42 0.39

0.310.22 0.28

0.25

0.410.47

0.400.49

0.500.50

0.20

0.06 0.110.21 0.20

0.28 0.22

0.05

Sub sample

(79)

Sub sample (152)





Improvement

Stabilization

Deterioration

Not sure






Full sample(345)

0.28

0.30

0.21

0.211.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0









Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

0.11 0.13 0.07 0.09

0.440.30

0.58 0.50

0.430.48

0.38

0.44

0.14

0.17

0.23

0.14

0.16

0.34 0.25

0.180.05

0.130.12

0.14

Sub sample (79)







1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion



Sub-Saharan Africa


0.24

0.45 0.420.33 0.31

0.190.28

0.49

0.44 0.47

0.41 0.49

0.520.50

0.23

0.11 0.110.26 0.20

0.290.22

0.04

Sub sample(106)

Sub sample (111)




Full sample (369) Sub sample (110) Full sample (377) Sub sample (108 ) Full sample (367)

Improvement

Stabilization

Deterioration

Not sure






Full sample(369)

0.11

0.18

0.43

0.28

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0






Became more cautious with certain sectors0.55 -0.03



Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

0.13 0.13 0.08 0.09

0.35 0.30

0.45 0.50

0.410.48

0.440.44

0.23

0.19

0.23

0.14

0.21

0.300.25

0.180.08

0.13

0.12

0.14

Sub sample (105)







1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion



Central and Eastern Europe


0.310.44 0.42

0.34 0.31 0.26 0.28

0.48

0.510.47

0.43 0.490.50 0.50

0.13

0.08 0.05 0.110.23 0.20 0.24 0.22

Sub sample

(77)

Sub sample (83)





Improvement

Stabilization

Deterioration

Not sure






Full sample(352)

0.19

0.47

0.17

0.171.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0









Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

0.14 0.13 0.09 0.09

0.370.30

0.47 0.500.46 0.48

0.48

0.44

0.19

0.20

0.23

0.14

0.13

0.32 0.25

0.18 0.11

0.04

0.12

0.14

Sub sample (79)







1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion



Commonwealth of Independent States


0.66

0.44 0.420.29 0.31

0.24 0.28

0.26

0.48 0.47

0.47 0.490.56 0.50

0.06 0.08 0.110.24 0.20 0.20 0.22

0.02

Sub sample(195)

Sub sample (197)





Improvement

Stabilization

Deterioration

Not sure






Full sample(374)

0.05

0.59

0.30

0.061.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0









Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

0.13 0.13 0.08 0.09

0.370.30

0.47 0.500.44 0.48

0.420.44

0.23

0.17

0.23

0.14

0.22

0.260.25

0.180.08

0.13

0.12

0.14

Sub sample (191)







1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion



ASEAN-5, China and India





Emerging Asia

0.550.41 0.42

0.25 0.31 0.23 0.28

0.30 0.53 0.47

0.530.49

0.57 0.50

0.110.06 0.11

0.22 0.20 0.20 0.22

0.04

Sub sample(123)

Sub sample (127)





Improvement

Stabilization

Deterioration

Not sure






Full sample(362)

0.08

0.46

0.36

0.10

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0









Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

0.12 0.13 0.10 0.09

0.35 0.30

0.48 0.500.47 0.48

0.40 0.44

0.23

0.17

0.23

0.14

0.15

0.28 0.25

0.180.11

0.14

0.12

0.14

Sub sample (125)







1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion




0.47 0.46 0.420.33 0.31

0.190.28

0.330.48

0.47

0.47 0.490.57

0.50

0.15

0.06 0.110.20 0.20 0.24 0.22

0.05

Sub sample

(137)

Sub sample (136)





Improvement

Stabilization

Deterioration

Not sure






Full sample(365)

0.10

0.32

0.37

0.21

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0









Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

0.12 0.13 0.09 0.09

0.390.30

0.51 0.500.44 0.48

0.420.44

0.21

0.16

0.23

0.14

0.20

0.27 0.25

0.180.09

0.100.12

0.14

Sub sample (130)







1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion



Middle East and North Africa


0.44 0.490.42

0.35 0.310.23 0.28

0.440.42

0.470.50

0.49

0.470.50

0.080.04

0.09 0.11 0.15 0.200.30

0.22

Sub sample

(93)

Sub sample (93)





Improvement

Stabilization

Deterioration

Not sure






Full sample(344)

0.32

0.38

0.08

0.221.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0









Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion

0.12 0.13 0.12 0.09

0.390.30

0.48 0.500.37 0.48

0.410.44

0.24

0.16

0.23

0.14

0.15

0.36 0.25

0.180.07

0.130.12

0.14

Sub sample (95)







1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion



Latin America and Caribbean


0.500.42 0.39

0.310.18 0.28

0.450.47

0.420.49

0.560.50

0.05 0.110.19 0.20 0.26 0.22

Sub sample (102)








Improvement Stabilization Deterioration Not sure

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

Advanced Markets: Euro Area (102)

0.16 0.30 0.47 0.07

Advanced Markets: Others (100)

0.13 0.52 0.30 .05

Sub-Saharan Africa (97)

0.25 0.33 0.20 0.22

Central and Eastern Europe (102)

0.13 0.54 0.24 0.09

Commonwealth of Independent States (96)

0.19 0.45 0.21 0.15

ASEAN-5, China and India (102)

0.53 0.33 0.07 0.07

Developing Asia (99)

0.47 0.34 0.09 0.10

Middle East and North Africa (98)

0.29 0.43 0.17 0.11

Latin America and Caribbean (96)

0.40 0.35 0.06 0.19

Share of correspondents answering each question

Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion



Large-Sized Banks














Became more cautious with certain countries

0.79 0.05

Decrease in available credit/liquidity

0.76 0.09

Became more selective with customers

0.75 0.04

Increase in the cost of funds

0.69 0.13

Increase in concerns about counterparties

0.63 0.14

Became more cautious with certain sectors

0.55 0.05

Increase in demand for risk-mitigating products

0.52 0.13

Increase in demand for TF instruments

0.28 0.09


0.10 0.13 0.07 0.09

0.400.30

0.54 0.50

0.400.48

0.41

0.44

0.17

0.19

0.23

0.14

0.21

0.320.25

0.180.07

0.120.12

0.14

Sub sample (100)







1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion



Large-Sized Banks – continued


0.40 0.420.28 0.31 0.30 0.28

0.51 0.47

0.50 0.49 0.52 0.50

0.09 0.110.22 0.20 0.18 0.22

Sub sample (102)









1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0


0.10 0.34 0.51 .05


0.20 0.58 0.15 0.07


0.27 0.27 0.21 0.25


0.18 0.44 0.28 0.10


0.20 0.44 0.19 0.17


0.66 0.25 0.06


0.48 0.32 0.10 0.10


0.25 0.39 0.24 0.12


0.28 0.41 0.06 0.25


Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion



Medium-Sized Banks

0.03















0.79 0.02


0.76 0.01


0.75 -0.03


0.69 0.01


0.63 -0.02


0.55 -0.02


0.52 -0.04


0.28 -0.03


0.15 0.13 0.12 0.09

0.27 0.30

0.46 0.50 0.48 0.48

0.44 0.44

0.27

0.12

0.23

0.14

0.19

0.21 0.25

0.18 0.15

0.14

0.12

0.14

Sub sample (155)







1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion



Medium-Sized Banks – continued


0.42 0.420.27 0.31 0.31 0.28

0.390.47

0.54 0.49 0.43 0.50

0.190.11

0.19 0.20 0.26 0.22

Sub sample (64)









1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0


0.21 0.30 0.46


0.25 0.53 0.20


0.34 0.22 0.22 0.22


0.32 0.28 0.30 0.10


0.19 0.54 0.10 0.17


0.59 0.28 .05 0.08


0.49 0.34 0.10 0.07


0.44 0.25 0.21 0.10


0.33 0.41 0.12 0.14


Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion



Small-Sized Banks

0.03

0.02















0.79 -0.05


0.76 -0.03


0.75 0.05


0.69 -0.06


0.63 -0.09


0.55 0.05


0.52 0.01


0.28 0.02


0.14 0.13 0.07 0.09

0.33 0.30

0.50 0.500.54 0.48

0.42 0.44

0.18

0.18

0.23

0.14

0.15

0.240.25

0.180.09

0.16

0.12

0.14

Sub sample (100)







1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0Sha

re o

f res

pon

den

ts a

nsw

erin

g ea

ch q

uest

ion



Small-Sized Banks – continued

0.03

0.02


Annex II Note on the Statistical Analysis

Statistical significance of the difference in results observed in the full-sample and the sub-samples are assessed. The statistical analysis takes the following three steps:

1. Multiple-choice options are converted into numerical values as follows: for Question 1, observations are converted to take values either 0 = deteriorate, 1 = stabilize, and 2 = improve (and 0 = not sure); for Questions 2, 4, 5, and 6, observations are converted to take values either 0 = no extent, 1 = some extent, and 2 = large extent (and 0 = not sure); for Question 3, observations are converted to take values either 1 = chosen or 0 = blank.

2. The sample mean, the standard error, and the t-statistic are computed for each option of each question, both for the full sample and also for all the sub-samples (9 subsamples by region and 3 subsamples by size).

3. The following null hypothesis is tested for each option of each question: that the sample mean of the two samples (full- and sub-samples) are the same.

The standard error of the difference in the sample means is computed assuming that the full- and sub-samples are not independent (i.e., the covariance between the two is assumed nonzero).


Annex III Questionnaire

The following questions were posted in the online survey during December 13-21, 2011.

Q1. How do you see the demand for trade finance evolving during 2012 by region? For a listing of countries contained within each region please see the table at the end of the Market Snapshot.

Imp

rove

men

t

Sta

bili

zatio

n

Det

erio

ratio

n

N/A

Not

sur

e

Advanced Markets: Euro Area O O O O O

Advanced Markets: Other O O O O O

Sub-Saharan Africa O O O O O

Central & Eastern Europe O O O O O

Commonwealth of Independent States O O O O O

ASEAN-5, China and India O O O O O

Developing Asia O O O O O

Middle East and North Africa O O O O O

Latin America and Caribbean O O O O O

Other , Please specify (..........)

Q2. Trade finance activities will “deteriorate” because: (Enter all that apply)

To a

larg

e ex

tent

To s

ome

exte

nt

To n

o ex

tent

A fall in the price of transactions (e.g., commodity prices)? O O O

A fall in the demand for trade activities? O O O

Less credit/liquidity availability at your own institution? O O O

Less credit/liquidity availability at your counterparty banks? O O O

A shift towards cash-in-advance transactions? O O O

A shift toward open account transactions? O O O

A decline in credit from international institutions for previously supported transactions?

O O O

A decline in support from Export Credit Agencies? O O O

Other reasons? (Please specify/) O O O

Q3. What was the impact of the recent European bank deleveraging on trade finance industry? (Enter all that apply)

Increase in the cost of funds O

Decrease in the availability of credit/liquidity O

Increase in demand for trade finance instruments O

Increase in demand for risk mitigating products O

Increase in concerns about counterparties O

Banks have become more cautious with certain countries O

Banks have become more cautious with certain sectors O

Banks have become more selective with customers O

Not sure O

N/A O

Other, please specify ( ) O

Q4. To what extent have the measures taken by Multilateral Development Banks, such as the International Finance Corporation (IFC)’s GTFP Insurance Facility (signed on June 2011) and Global Trade Liquidity Program (GTLP) (launched in July 2009), helped in mitigating risks and easing funding pressures with respect to trade credit financing?

To a large extent O

To some extent O

To no extent O

N/A O

Not sure O

Q5. To what extent have the central bank swap lines helped to lower the cost of borrowing and ease liquidity strains in financial markets?

To a large extent O

To some extent O

To no extent O

N/A O

Not sure O


Q6. To what extent is the preparation for the implementation of Basel III affecting costs of funds and liquidity for trade finance right now?

To a large extent O

To some extent O

To no extent O

N/A O

Not sure O

Q7. What else should the official sector (governments and international financial institutions) do with respect to trade credit financing?

Q8. Finally, please tell us a little bit about you.

a. In which group(s) of countries is/are your trade finance activities primarily focused?

(Check all that apply)

Advanced Markets: Euro Area O

Advanced Markets: Other O

Sub-Sahara Africa O

Central and Eastern Europe O

Commonwealth of Independent States O

ASEAN-5, China and India O

Developing Asia O

Middle East and North Africa O

Latin America and Caribbean O

b. In what group(s) of countries is/are your bank’s trade finance department/branch located?

(Check all that apply)



Sub-Sahara Africa O




Developing Asia O



c. In what group of countries is your bank’s global headquarters office located?



Sub-Sahara Africa O




Developing Asia O



d. What were your bank’s total assets worldwide expressed in U.S. dollars as of your most recent reporting period?

Under $100 million O

$100 million - $499 million O

$500 million - $999 million O

$1 billion - $4.9 billion O





$100 billion or more O

e. Is there any other comment regarding the current environment for trade finance that you would like to provide that was not already discussed in this questionnaire?


Groups of Countries

Advanced Countries (110)


Central & Eastern Europe (904)


ASEAN5, China and India

Developing Asia (505) excl. ASEAN5, China and India



Euro Area

Austria

Belgium

Cyprus

Estonia

Finland

France

Germany

Greece

Ireland

Italy

Luxembourg

Malta

Netherlands

Portugal

Slovak Republic

Slovenia

Spain

Non-Euro

Australia

Canada

Czech Republic

Denmark

Hong Kong SAR

Iceland

Israel

Japan

Korea

New Zealand

Norway

Singapore

Sweden

Switzerland

Taiwan Province of China

United Kingdom

United States

Angola

Benin

Botswana

Burkina Faso

Burundi

Cameroon

Cape Verde

Central African Republic

Chad

Comoros

Congo, Dem. Rep. of

Congo, Rep. of

Côte d’Ivoire

Equatorial Guinea

Eritrea

Ethiopia

Gabon

Gambia, The

Ghana

Guinea

Guinea-Bissau

Kenya

Lesotho

Liberia

Madagascar

Malawi

Mali

Mauritius

Mozambique, Rep. of

Namibia

Niger

Nigeria

Rwanda

São Tomé & Príncipe

Senegal

Seychelles

Sierra Leone

Somalia

South Africa

Swaziland

Tanzania

Togo

Uganda

Zambia

Zimbabwe

Albania

Bosnia & Herzegovina Bulgaria

Croatia

Hungary

Kosovo

Latvia

Lithuania

Macedonia, FYR

Montenegro

Poland

Romania

Serbia

Turkey

Armenia

Azerbaijan

Belarus

Georgia

Kazakhstan

Kyrgyz Republic

Moldova

Mongolia

Russia

Tajikistan

Turkmenistan

Ukraine

Uzbekistan

China

India

Indonesia

Malaysia

Philippines

Thailand

Vietnam

Afghanistan, I.S. of

Bangladesh

Bhutan

Brunei Darussalam

Cambodia

Fiji

Kiribati

Lao PDR

Maldives

Myanmar

Nepal

Pakistan

Papua New Guinea

Samoa

Solomon Islands

Sri Lanka

Timor-Leste, Dem. Rep. of

Tonga

Vanuatu

Algeria

Bahrain

Djibouti

Egypt

Iran, I.R. of

Iraq

Jordan

Kuwait

Lebanon

Libya

Mauritania

Morocco

Oman

Qatar

Saudi Arabia

Sudan

Syrian Arab Rep.

Tunisia

United Arab Emirates

Yemen, Rep. of

Antigua & Barbuda

Argentina

Bahamas, The

Barbados

Belize

Bolivia

Brazil

Chile

Colombia

Costa Rica

Dominica

Dominican Republic

Ecuador

El Salvador

Grenada

Guatemala

Guyana

Haiti

Honduras

Jamaica

Mexico

Nicaragua

Panama

Paraguay

Peru

St. Kitts and Nevis

St. Lucia

St. Vincent and the Grenadines

Suriname

Trinidad and Tobago

Uruguay

Venezuela

Note: The classification used in the Market Snapshot corresponds to the winter 2011 WEO classification.

34 ICC-IMF Market SnapShot • January 2012

The ICC Banking Commission

The ICC Banking Commission is a leading global rule-making body for the banking industry, producing universally accepted rules and guidelines for international banking practice, notably letters of credit, demand guarantees and bank-to-bank reimbursement. ICC rules on documentary credits, UCP 600, are the most successful privately drafted rules for trade ever developed and are estimated to be the basis of trade transactions involving more than one trillion US dollars a year. The Banking Commission is equally a worldwide forum of trade finance experts whose common aim is to facilitate international trade finance across the world. With over 500 members in 85 countries, many of them emerging, the Banking Commission is the largest ICC Commission. ICC voluntary market-based approaches developed by the Banking Commission have often been praised for levelling the playing field in trade finance practices.

The Officers of the Banking Commission and its secretariat are:

Kah Chye TanChair, Global Head of Trade and Working Capital, Barclays

Georges AffakiVice-Chair, Member of the Executive Committee and Head of Structured Finance, CIB Legal, BNP Paribas

Steven BeckBanking Commission Senior Advisor, Head of Trade Finance, Asian Development Bank (ADB)

Gary CollyerBanking Commission Senior Technical Advisor, Founder, Collyer Consulting

Daniel SchmandManaging Director, Head of Trade Finance and Cash Management Corporates EMEA, Global Transaction Banking, Deutsche Bank

Thierry SénéchalExecutive Secretary, Banking Commission, International Chamber of Commerce

Dan TaylorVice-Chair, Executive Director, TSS Global Market Infrastructures, JPMorgan

Alexander ZelenovVice-Chair, Director, Financial Institutions Department, Vnesheconombank

Yanling ZhangVice-Chair, Chairman, Bank of China Aviation Private Limited

ICC-IMF Market SnapShot • January 2012

The International Chamber of Commerce (ICC)

ICC is the world business organization, a representative body that speaks with authority on behalf of enterprises from all sectors in every part of the world. The fundamental mission of ICC is to promote trade and investment across frontiers and help business corporations meet the challenges and opportunities of globalization. Its conviction that trade is a powerful force for peace and prosperity dates from the organization’s origins early in the last century. The small group of far-sighted business leaders who founded ICC in 1919 called themselves “the merchants of peace”. Today ICC groups hundreds of thousands of member companies and associations from over 120 countries. National committees work with their members to address the concerns of business in their countries and convey to their governments the business views formulated by ICC.

ICC has three main activities: rules-setting, dispute resolution and policy. Because its member companies and associations are themselves engaged in international business, ICC has unrivalled authority in making rules that govern the conduct of business across borders. Although these rules are voluntary, they are observed in countless thousands of transactions every day and have become part of the fabric of international trade. ICC also provides essential services, foremost among them the ICC International Court of Arbitration, the world’s leading arbitral institution. Another service is the World Chambers Federation, ICC’s worldwide network of chambers of commerce, fostering interaction and exchange of chamber best practice. ICC enjoys a close working relationship with the United Nations and other intergovernmental organizations, including the World Trade Organization and the G8/G20.

For more information, visit www.iccwbo.org

icc-imf market snapshot january2012 - uscib · icc-imf market snapshot january2012 ... join forces...

Documents